Commercial Property Depreciation Schedules
Preparing a Commercial property depreciation schedule is more complicated than residential for a number of reasons.
The commercial properties themselves can vary enormously. We do commercial property Depreciation Schedules on everything from small factory units to large grazing and cropping properties.
In between, there are offices, shops, restaurants, childcare centres, aged care homes, motels, you name it. Some years ago, we even did a fish farm.
Another twist is that commercial properties sometimes have a few parties involved. There could be a landlord who owns just the building, and a tenant who owns the fitout. Those owners are sometimes completely separate, or at times related – it’s not unusual for us to do two commercial property Depreciation Schedules for a single commercial property.
And there are complications like the ever shifting threshold for the Instant Asset Write-Off. More about that soon..
More Depreciation in Commercial Properties
Depreciation can be Claimed on New and Second Hand Assets
The 2017 changes to depreciation did not affect commercial properties, so second-hand Assets (Plant and Equipment) in recently purchased commercial properties can still be depreciated. This could be why we are doing more and more commercial property Depreciation Schedules – or perhaps the accountants who refer clients to us are realising we can take care of all their depreciation needs, not just residential.
Depreciation Can be Claimed on Older Commercial Buildings
Depreciation on some commercial buildings also started in 1979, which is further back than residential properties. And most commercial buildings have required renovations to keep them rentable.
Renovations to commercial properties often involve significant fitouts. If a tenant does their own fitout, they depreciate it – putting aside any landlord contribution. But what if someone buys a property with an existing fitout done by a departed tenant? It is likely they can claim the cost of that fitout.
Getting back to landlord contributions, it is not unusual in these cases for us to do two Depreciation Schedules: one to reflect the landlord’s contribution, and one for the tenant’s costs.
Instant Asset Write-Off and Commercial Property
Then there is that increasingly generous Instant Asset Write-Off.
The threshold for this has moved around a lot of late – a result of attempts to stimulate spending. The acquisition date determines how we treat the Assets.
In 2012, the threshold was $1,000. Then it went to $6,500, before slipping back to $1,000. There was a leap in 2015 to $20,000. It next went to $25,000 where it paused for a few months before going to $30,000. Then it leapt quickly a couple of times and is now at $150,000.
And the Instant Asset Write-Off applies to used Assets as well as brand new.
With all those variations it’s important to choose a Quantity Surveying firm who specialises in commercial property Depreciation. That’s why most of our work comes via referral from accountants who rely on our expertise. Call us on 1300 66 00 33 or enquire online now
We can answer and ask those tricky questions about dates and fitouts and ownership structures.
What Does A Commercial Depreciation Schedule Cost?
It depends.
As you can imagine, the time it takes us to prepare a Commercial Property Depreciation Schedule for small warehouse will be less than it took to do that fish farm.
We quote each individual commercial property Depreciation Schedule on a case-by-case basis. Just give us the address, answer a few simple questions and we’ll provide a free no-obligation quote. In many cases we can also provide an indicative depreciation figure if we have enough information.
If we don’t think a job is worth doing, we’ll tell you.
How Long Does It Take To Get A Commercial Depreciation Schedule?
Again, it depends.
Access can be an issue, especially if we are doing the Schedule for just the landlord and not the tenant.
Once we have done the inspection, though, things move quickly and we can complete Commercial Property Depreciation Schedules within five working days. If it’s urgent, just let us know and we will speed that up.
You Can Even Claim Common Property
A lot of people miss this with commercial properties.
If the property is part of a strata scheme, there is common area ‘building’ and Assets to be claimed.
Even with a small factory unit, if it is part of a complex there will often be driveways and hardstand, fencing, fire services, card readers, security cameras, gate motors etc.
Because we use quantity surveyors to carry out inspections and not data collectors, we capture those things.
When You’ve Owned a Commercial Investment Property for a Long Time
If you’ve owned your commercial property for a while and haven’t been claiming depreciation, all is not lost. We frequently speak with clients in this situation and generally it doesn’t complicate things very much at all. It’s just as easy for us to start a Depreciation Schedule today as it is for us to start one, say, five years ago.
Your accountant may then need to amend some previous tax returns. The ATO allow two prior financial years to be submitted or amended with no questions asked. Going back further than this can be possible, but you’ll want to check with your accountant. We’ve done schedules going back several years when requested, there’s no additional charge.
Like most things, it’s best to get started sooner rather than later to ensure you’re not leaving money on the table.
